1. INDUSTRIAL MINERAL TRANSPORTATION and MARKETING (Part 1)
James M. Barker
New Mexico Bureau of Geology & Mineral Resources
A Division of New Mexico Tech
801 Leroy, Socorro, NM USA

2. TRANSPORTATION CONCEPTS
Overall transport is 21% of US economy
Often >50% of delivered IM cost
Bulk versus value
Place value
Value added
Quality retention or “do no harm”
Efficiency, luck, and risk

3. Transport Often exceeds 50% of delivered cost (highest except food)
Industrial Mineral Mine Shipping $ End % of
As $ per short ton $ $ User del $
Construction aggregates 4– –
Industrial glass/foundry sand 7–12 6–
frac sand 15–12 25–
Cement
domestic 40–50 8–
imported 26–30 8–
Pumice (import) 10–15 9–
Coal 19–28 10–
Gypsum 5–10 10–
Feldspar (ground) 40–50 40–
Lime 35–50 15–
Kaolin (slurry) 30–45 20–

4. GEOLOGY existence Development 
TRANSPORTATION 
Production
profit
MARKET

5. TRANSPORTATION AS MARKETING

6. “THE MARKETING CONCEPT”
Focus all activities towards total customer management and satisfaction
Make products consumers want vs making consumers want a product
Transportation can  customer satisfaction
Industrial marketing better for IMs than consumer marketing approach
Industrial marketing focuses on customer satisfaction

8. IM TRANSPORT COST FACTORS
IM volume & processing
Wet or dry; bulk or packaged
Transport distance
Availability, schedule & transit time
Equipment & support facilities

9. …more factors Distribution, terminal, & port facilities
Support services or lack thereof
Ex-Im tariffs, bonding & customs
Governmental & environmental regs.
Cultural or regional differences
Insurance & risk-avoidance

10. Truck Lower Risk Rail  Barge   Ship Higher Risk
TRANSPORT RISK
Truck Lower Risk
Rail 
Barge  
Ship Higher Risk

11. TRUCK TRANSPORT Unlimited year-round movement Load & unload quickly
Operate independently with small crew
Flexible
Small lots & variable sizes
infrequent shipment
Very expensive; 10–25¢ per ton-mile

12. TRUCKING 2 Transports about 60% of US cargo Highest cost per ton mile
Very flexible
Rates fixed (common carrier) or negotiation
States set common or contract carrier
Common carrier serves all = highly regulated
Contract carrier negotiates with each customer
separate, confidential contract rates
based on many economic and competitive factors

13. RAIL TRANSPORT Slow; limited to track Inflexible
Expensive, 2–4¢ per ton-mile
Time, volume, distance interaction
Railcars/service often unavailable
Railroads often difficult to deal with

14. Rail 2 Subsidized or nationalized except in U.S.
Haul about 25% of freight
Railroads restrict interchange points & reciprocal switching agreements with other railroads
Today most material moves under commodity, scale, or contract rates held confidential for competitive advantage
Hauls from producer to user over a single railroad are cheaper than joint-line movement
profits are shared
some expenses duplicated

15. Railcar service Mingle car--100 t or less, very slow, high rates
Multiple car—1200 t or more, slow, moderate rates
Trainload t or more, cars loaded and unloaded together, fast, low rates
Unit train--contract tons per time in set number of cars, continuous turnaround service, very fast, lowest rates
Some railcar types used by IM producers are:
hopper
rapid discharge
gondola
covered
pressure differential
and special service

16. Railroad Cost Factors Loading time Volume moved Distance
Unloading time
Rail equipment
Rail equipment owner
Competing transport
Competing rates
Value of service

17. BARGE TRANSPORT Slow Inflexible
needs river, canal or waterway and locks
oriented to large bulk cargoes
Limited access; grain season (Aug.–Nov.)
Inexpensive; 0.75–1¢ per ton-mile

18. Barge 2 Relatively unregulated rates; private contracts
Contracts negotiated via market forces
Inland waterways carry 12% of US freight for 2% of US freight billings
Inland waterway is about 23,200 km of which the lower 400 km are accessible to ocean-going vessels
Coastal seaways (Gulf Intracoastal Waterway from Texas to Florida is also important
The Rhine, and its feeder ports on the North Sea (Rotterdam, Antwerp, Amsterdam), connect via canal to the Danube and the Black Sea

19. SHIP TRANSPORT Slow Needs extensive infrastructure Very inflexible
not now geared to IM cargoes
not usually a factor inland
Seasonal (grain, iron, coal, fertilizer; E↔W)
Very inexpensive; 0.1–0.15¢ per ton mile

20. SHIP TYPES AND SIZES

21. SHIPPING CONTRACT RISK
Through Rate Lower Risk
Liner 
Trip Time or Voyage Charter  
Contract of Affreightment   
Time Charter    
Bare Boat Higher Risk
Contract called a Charter Party => fixture
Through Rate
Liner shceduled route based on published tariffs under Conference control or not
Tramp-charter types
Voyage cost per ton loaded or lump sum
Trip Time Single voyage or round trip; ~Time charter; rates from spot market
C of A More than one voyage; lift specific tonnage for voyages over a set period
Time Charter Voyages for a specified time uder direction of charterer (disponent owner) who bears most costs (daily rate incl. fuel, port costs etc.) except wages, victuals, nsurance
Bare Boat charter operates for specified time without restriction and pays all costs but financing of ship

22. …more risks Accidents Weather (time to avoid) Breakdowns
Stowage errors
Port problems (either end of voyage)
Political problems

23. Shipping Tramp Liner (schedule with conference) Coastal or coaster
Voyage: single voyage, rates from spot market
Contract of affreightment: lift specific tonnage over several voyages
for a set period
Time: voyages for a specified time under direction of charterer who
bears most costs except wages, victuals, and insurance as "disponent owner"
Bare boat: charterer takes vessel for specified time, staffing and
operating it without restriction
Liner (schedule with conference)
Coastal or coaster
Short sea
Long sea

24. Shipping, cont. Underutilized in past by industrial minerals
Big 3+ = wheat, iron ore, coal, (fertilizer)
Brokers critical; history of ship helpful to limit contamination and other problems
Bulk shipping
Unregulated
Cyclical
Fixtures by negotiation

25. Shipping, even more
Control over commodity transport greatest if shipping FOB load port and fixing a vessel
Leaves control in hands of IM producer
Ensures vessel type, contamination level,
ship-owner reliability, on-time arrival
Flexibility to respond to the freight market
Charter on a delivered basis
Cost and freight, or C&F
Leaves control in the hands of the ship-owner
Causes some uncertainty and lowers flexibility

26. Shipping Brokers Cable, cargo, and ship brokers lessen risk
canvass the shipping market,
evaluate freight offers and services,
provide relatively unbiased opinions
Worldwide shipping market
cyclical
dominated by supply and demand
operates 24/7
Correct choice of discharge port is critical
based on distance to customer and transport available
shortest distance is not always the cheapest

27. TRENDS  Deregulation & integration  Marketing & transport distance
 Just in time delivery; mostly by truck
 Use of brokers, traders, trade groups
 Distribution centers
 Bulk or container terminals

28. …more trends  Use of rail & water transport
 Large ships serving fewer ports
 Use of containers on inland waterways
 Importance of transport managers
 Internet information & commerce

29. SUMMARY OF TRANSPORTATION TYPES

30. North American Perlite A transport example
Greek imports to East Coast of USA
Trans-loading from ship to railcars
Market focus reversal to West Coast
Containers to Pacific Rim
Also Gulf access (Mobile; Houston)
Panama Canal, Cape Horn